Ministry of Human Resources & Emiratisation has announced amendments to the labour law in the UAE. Federal Decree Law No. 33 of 2021, which is effective from 2 February 2022.
The new labor law changes are fairly substantial and necessitate amendments to existing employment contracts, as well as modifications to policies and procedures concerning future agreements with new employees. We have summarised the major amendments as stated below. Details mentioned in this article is for the purpose of understanding the various amendments in the new labour law, however readers are advised to seek proper consultation before taking any decisions.
Employment contracts
All employees must be employed on a fixed term contracts not exceeding the period of three years in length. The contracts can be renewed, and any renewal is included in total period of service. Transition to fixed term contracts must be completed by 1 February 2023. However, changes can now be made to MoHRE template contract and different forms exist depending on type of visa/work model.
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Work models
New work models introduced which includes full-time, part-time, for one or more employers, temporary, flexible, remote working.
Probationary period
The maximum six-month probationary period remains same. However, employers must give 14 days’ notice to dismiss.
Employees must give 14 days’ notice to resign if they are leaving the UAE and one month notice required if case, they are leaving to join another employer in the UAE.
Where an employee leaves during the probationary period to join another employer in the UAE (or returns to the UAE to work within three months), the old employer may claim the costs of recruitment from the old employer.
Non-compete
Non-compete clauses can be used and can last up to two years in length. The restriction must go no further than is necessary to protect a legitimate business interest requiring that it be limited in terms of geographical location, type of work and length. The law sets out the circumstances in which post-termination restrictions will unenforceable including where, for example, the employer terminates the employment in breach of its legal obligations due to the employee.
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Employee benefits
Overtime
A limit of two hours per day of overtime continues to apply. A further cap of 144 total working hours (including overtime hours) over a three-week period also applies. Rates of pay for overtime continue unaffected and are calculated on the rate of basic pay, except that the enhanced premium for night work now only applies for hours worked between 10pm and 4am. Limited exceptions apply to the overtime (and overtime pay) provisions. This list of exemptions has not been materially expanded and includes for members of the board and for employees with supervisory responsibilities.
Maternity leave and pay
Maternity leave entitlement has been increased to 45 days at 100% pay; plus 15 days at 50% pay.
There is now no minimum qualifying service requirement. This maternity leave is now available to women who suffer from a miscarriage or still birth after six months of pregnancy. An additional 45 days’ unpaid leave is available where the employee suffers from a pregnancy related illness, and an additional 30 days’ paid leave and 30 days’ unpaid leave is available where the employee’s child has a disability.
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Annual leave
Basic annual leave entitlement remains the same. Employees no longer have the automatic right to carry forward unused annual leave to the next holiday year. Any carry forward or payment in lieu can only be made with the agreement of the employer. Payment in lieu of holidays on termination is at the rate of basic salary only.
Study leave
Employees with more than two years’ service are entitled to ten days’ leave per year in order to sit exams. To be eligible, the employee must be studying at a government approved UAE educational institution.
Compassionate leave
All employees are entitled to compassionate leave in the event of a death of a family member. In case of death of spouse – five days’ leave; and in cased of death of parent, child, sibling, grandchild, or grandparent – three days’ leave.
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End of service benefits
Employees with over one years’ service continue to be entitled to ESG, calculated on the same basis as before. Employees summarily dismissed now retain their entitlement to ESG, and no reductions apply where an employee resigns. Payment of ESG, together with all other termination payments, must be made within 14 days of the termination date.
Anti-discrimination
The New Labour Law further defines the existing protections of the previous labour law, prohibiting discrimination based on race, color, sex, religion, national origin, ethnic origin, or disability. Women have also been given additional protections with an express prohibition on terminating a female employee’s employment on the basis that she is pregnant or on maternity leave.
The New Labour Law has also added an express prohibition against sexual harassment, bullying, verbal, physical or psychological violence of employees by their employer, manager or colleagues, and an employer cannot force an employee to work against his or her will, including by threatening with a penalty.
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